CRYPTO SECTOR UNDERPERFORMING INVESTORS AT RISK
Coinbase Global Inc., listed last year as one of the best ways to gain exposure to crypto when it was first listed on Nasdaq, dropped by 75% since December. MicroStategy Inc. dropped by 62%, or more than Bitcoin, a software company that has been identified as its representative since Chief Executive Officer Michael Saylor loaded its balance sheet with coins. Leaders of digital token mining Marathon Digital Holdings Inc. and Riot Blockchain Inc. they are down by the same prices, while smaller competitors such as Stronghold Digital Mining Inc. even more thrown away.
As the second quarter declines, cryptocurrency-related shares are linked to digital tokens as one of the world’s most dangerous asset classes. The NYSE FactSet Global Blockchain Technologies Index has dropped by 65% this year, not only effectively for Bitcoin, but also for tracking the most volatile items called meme stocks and the name tag of special targeted vehicles.
Crypto stocks "are actually a lucrative bet on one of the most dangerous assets available," said Steve Sosnick, chief strategist at Interactive Brokers LLC. He added that there are a few other bets that he would consider to be very risky for investors, including certain meme and pen shares.
While the decline in Bitcoin is nothing new in its entire 12-year history, recent sales have been particularly brutal in view of the scale of losses seen across the crypto industry. In less than six months, the crypto market has seen more than $ 1 billion be cleared, and the index of 100 major digital assets is sinking by about 59% and its worst annual peak since the start of the bear market in 2018.
The selloff in crypto names, which began in early November after Bitcoin reached a record high of $ 69,000, has accelerated this year as investors around the world begin to fluctuate from risky asset classes amid fears that a massive aggressive rate is rising by Federal. The Reserve, which aims to curb inflation, will hurt the US economy. Adding to the pain for investors was the May installation of the Terra / Luna ecosystem which sparked a series of industry-wide extinctions and created panic sales.
Despite the risky risks and prices of stocks, Wall Street analysts have remained optimistic about the number of crypto-exposed shares.
Coinbase, which lost more than $ 60 billion since hitting the record in November, currently has 20 purchase recommendations, according to data compiled by Bloomberg. That was exactly the same number he had in early January, when stock was more than three times its current value.
"While we do not underestimate the impact of the current crypto market crash, we also believe that any view that Coinbase will not be able to survive this latest challenge is wrong because of the facts," said BTIG analyst Mark. Palmer this week reduced his stock price to $ 290, down from a high of $ 380. It closed on Friday at $ 62.71, after doubling 22% this week.
Other crypto stocks have seen similar bullish commitments from the analyst community. Bitcoin miners Riot Blockchain and Marathon Digital each have at least 75% equivalent buy rates and a 12-month target price of almost 379% and 293% respectively than their stock prices.
They are not alone anymore. Of the 33 stocks that make up the NYSE FactSet Global Blockchain Technologies Index, the average return rate for next year is almost 200%, more than five times the average for the Nasdaq 100 Index.
To be sure, a good long-term view of the cryptocurrency market came up without any warnings.
"We always doubt that crypto prices have completely disappeared," said Compass Point analyst Chris Allen. "We can see some irregularities due to the uncertainty of the Celsius / 3AC deficit situation and the pending sale of goods that could result."
Another sign that is particularly troubling for investors who want to buy a dip in crypto stocks, despite the already deep-selling history of certain names, shares like Voyager Digital Ltd. prove that there is always room for continuous collapse.
Shares of cryptocurrency buyers' stocks plummeted 53% on Wednesday, the majority since 2001, after it said it might issue a notice not to pay the hedge fund Three Arrows Capital Ltd. for its failure to repay a loan amounting to approximately $ 660 million. Prior to that, the stock had lost about 90% of its value this year.
"Given the magnitude of the exposure, and the uncertainty surrounding the Voyager collection at any of these levels, we believe it is difficult to reach a reasonable Voyager value estimate per share," writes KBW analyst Kyle Voigt in the book. after taking out his best rate in stock.